Rural demand has been a pain point for fast-moving consumer goods (FMCG) companies for the last six quarters, but the situation has now worsened with distributors being forced to extend more credit to retailers. Also, the frequency with which distributors procure stocks from companies has reduced.
Distributors that Business Standard spoke to said on condition of anonymity that credit days had gone up in rural areas, and attributed this to high inflation. They added that they had started procuring stocks from FMCG companies once every 10 days compared with once a week earlier.
Alan Jope, chief executive officer (CEO) of global FMCG giant Unilever, recently called out the stress in rural areas in the country during a conference call with investors.
"Indian markets are growing in value, but volumes are declining.
This consumption weakness is due to the impact of inflation on Indian consumers, particularly those in rural areas," he had said.
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